Taiwan's government weighs legal action over allegations against recycler

By: Steve Toloken

May 13, 2014

Taiwanese securities regulators say they plan to file a lawsuit against stock analyst firm Glaucus Research Group California LLC for falsely accusing a publicly listed Taiwanese plastic recycling company of misstating its financial information.

Taiwan’s Financial Supervisory Commission told local media May 5 that the Glaucus accusations against Asia Plastic Recycling Holding Ltd. were false and believes that the research firm "maliciously spread rumors," which would be a crime under Taiwan’s securities laws.

It is the latest wrinkle involving Glaucus, a short-selling stock trading firm that has targeted other plastics companies. In March, Glaucus had made similar accusations of overstating earnings against China Lumena New Materials, a Hong Kong-listed maker of polyphenylene sulfide resin.

Taiwanese authorities said they examined APR’s records and dispatched a team to spend three days auditing its recycling factories and operations in mainland China, according to media reports. FSC said it was considering filing a criminal complaint.

But Glaucus defended its conclusions in an open letter on its website, saying that it spent hundreds of hours over five months conducting research. It questioned whether Taiwanese authorities had taken enough time to review independent evidence like public tax and land records.

“Regulatory investigations into material misrepresentations by publicly listed companies take years in the United States and Hong Kong, and rightfully so, because regulators must conduct a detailed, lengthy and thorough investigation of the available evidence,” Glaucus said.

Glaucus said that after it published two previous reports involving companies in Hong Kong and the United States, regulators in those jurisdictions took between six months and two years to investigate before filing charges against the companies.

APR strongly denied the allegations. It has factories in Fujian and Jiangsu provinces and recycles ethylene vinyl acetate and polyethylene materials.

Lumena faced some new allegations as well this week.

After Chinese media reported that the company’s chairman and a major shareholder had both disappeared, the company issued a statement May 7 to the Hong Kong stock market denying the allegation.

After the initial Glaucus report in late March, Lumena announced it would delay issuing its 2013 financial results, which had been planned for March 28. As of May 8, the company had not issued its financial report.